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Financial security, after a full working life is now an expectation, rather than an aspiration. Pensions were one of the great societal innovations of the 20th century. From [prime minister 1916-1922] Lloyd George's commitment to greater security in old age funded from general taxation to a range of occupational initiatives, the Poor Law fear of poverty was removed, if not eliminated. And, as public services grew in scope, pension arrangements for public servants became a basic element of the reward structure. It was argued that lower wages and salaries than in the private sector were compensated by greater job security and assured pensions. This analysis is difficult to sustain down at the Dog and Duck. The intensity of pressures on the private sector in the past few years, made worse by the recession, has led to job insecurity, a drive down on financial reward and the collapse of many pension schemes. Predictably, this has led public opinion to put public sector pensions into ‘fat cat' territory – a favourite haunt of the media, together with the saloon bar. But facts can sometimes get in the way of a good argument, of course. There is no doubt that ‘pay as you go' public sector pensions, funded from general taxation, look increasingly unsustainable. But the Local Government Pension Scheme (LGPS) is funded by contributions from employees and employers. It is not fully funded, but the schemes have sufficient cash, and cover their liabilities. The very nature of pensions mean that a long-term view must be taken – about investment policy, contributions and economic trends. The watchwords must be affordability and sustainability. There are other pressures – better health means we are living longer. Early retirements have placed added pressure. The perceived unfairness of an assumed retirement age of 65 in local government, and 60 in the rest of the public sector, should be addressed by a higher retirement age for a fitter workforce. Against all this, the average annual pension in the LGPS is around £4,000, due to the prevalence of low-paid and part-time work. A modest return for dedicated public service. The high earner, final salary position must be addressed specifically, not as a problem with the entire scheme. It would be foolish if the unintended consequence of pension reform was more relative poverty and reliance on benefits, reversing the great achievements of the last century. Level-headed reform creating flexibility and fairness must be our goal. Not easy to achieve, but essential. John Ransford is chief executive of the Local Government Association

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